Holding

A notification under s.18(3) need not expressly state the area; the area may be deduced by implication, and if the intended area is the whole territory, the notification remains valid.

Summary

The appellants, Ramdeo Onkar Mal & Anr., were prosecuted under the Forward Contracts (Regulation) Act, 1952 for purchasing Tur (Arhar) in violation of three government notifications issued on 17 July 1958. They challenged the validity of the notifications, contending that the area of operation was not expressly mentioned, which they argued was required by section 18(3) of the Act. The High Court upheld the notifications, and the Supreme Court was asked to decide whether a notification under s.18(3) must expressly specify the area or whether the area can be inferred. The Court held that the government must consider the area when issuing a notification, but the area may be communicated either expressly or by necessary implication; an omission of an express statement does not invalidate the notification if the area can be deduced, such as the whole territory. The material before the Court showed the notifications were intended to apply to the entire country, so they were valid. Consequently, the appeal was dismissed.

Issues considered

Whether a notification issued under sub‑section (3) of section 18 of the Forward Contracts (Regulation) Act, 1952 must expressly specify the geographical area to which it applies
Whether the area of operation can be inferred from the content of the notification and related material

Legislation cited

Code of Criminal Procedures. 435, s. 561A, s. 56JA
Forward Contracts (Regulation) Act, 1952s. 16, s. 17, s. 18(1), s. 18(3), s. 20, s. 21

Subjects

Forward contractsnon‑transferable specific delivery contractsnotificationarea specificationstatutory interpretationpublic interestregulatory control

Judgment

A 14

FIRM RAMDEO ONKARMAL & ANR.
v.
STATE OF U.P. & ANR.
B
July 21, 1981

[R.S. PATHAK AND 0. CHINNAPPA REDDY, JJ.J

Forward Contracts (ReJ.rulatio11) Act. 1952 s. 18 (3)-Regufation and
c Control of non-transferable specific delivery contracts-Notification issued-Area
over which regulation and control to extend-Whether to be expressly specified in
notification.

The Forward Contracts (Regulation) Act, 1952 by sub-section (1) of section
18 declares that the provisions of Chapters III and IV shall not apply to non·
transferable ~specific delivery contracts for the sale or purchase of any goods.
D Sub-section (3) of section 18 however, provides that if the Central Government
is of opinion that in the interest of the trade or in the public interest, it is ex-
pedient to regulate and control such contracts in any area, it may by notification
in the Official Gazette, declare that all or any of the provisions of Chapters III
and IV shall apply to such class or classes of non-transferable specific delivery
contracts in such area and in respect of such goods or class of goods as may be
specified in the notification and may also specify the manner in which and the
E extent to which all or any of the said provisions shall so apply.

On July 17, 1958 the Central Government issued three notifications under
the Act. The first notification S.0. 1384-B issued under section 17 read with
section l 6 of the Act prohibited forward contracts for the sale or purchase of
certain specified goods, including Tur (Arhar). The second notification S.0.
1384-C issued under sub-section (3) of section 18 declared that section 17 would
F apply to non-transferable specific delivery contracts in resp~ct of the goods
specified in the notification, and these included Tur (Arhar). The third notifica-
tion, S.O. 1384-D. issued under sub-section (1) of section 17 declared that no
person could, save with the permission of the Central Government, enter into
any non-transferable specific delivery contracts for the s:ile or purchase of the
goods specified therein 1 and these included Tur {Arhar).

G The appellants were prosecuted for various offences under section 20 and
section 21 of the Act on the ground that three transactions of purchase of Tur
(Arhar) were entered into by them in violation of the aforesaid notifications.
The appellants challenged the validity of the notifications but the Sub-Divisional
Magistrate and the Sessions Judge in revision took the view that the chal1enge
was premature.
H
A Division Bench of the High Court dismissed the appellant's petition
under section 561 A read with section 435 Code of Criminal Procedure, upheld
FIRM RAMDEO V. U.P. STATE 15

the validity of the notifications, and rejected the plea of the appellants that the A
notifications were invalid as they did not specifically mention the area over which
they were to operate.

Dismissing the appeal to this Court,
HELD: 1. What sub-section {3) of section 18 requires is that before
issuing a notification under that provision the Central Government must satisfy
itself that the regulation and control of non-transferable specific delivery con- B
tracts in a particular area are in the interest of the trade or in the public interest.
The determination of the area over which the regulation and control will extend
is a vital component to which the Central Government must apply its mind when
deciding to issue a notification, and when a notification is in fact issued the area
must be communicated by specifying it in the notification. [18 D]

2. The area specified may be comprehended from material expressed or C
implied in the notification. The sub-section does not require that the area must be
expressly specified in the notification. If it is possible to define the area by
necessary implication, that is sufficient compliance with the requirement of the
sub-section. [18 E]

3. A notification may operate over part only of the territory to which the
Act extends, or it may be intended to operate throughout that territory. D
Ordinarily, whether the notification extends over part only of the territory or
throughout the territory would be specified in the notification. If the notification
is intended to operate over part only of the ,territory to \Vhich the Act extends,
the notification must necessarily define that lin1ited area. When it contains no
express signification of the area, it may be implied that it is intended to operate
throughout the territory covered by the Act. That is a co11struction by i111plica-
tion. It is not mandatory in such a case that the notification should specify
• that it operates throughout the territory to which the Act extends. i18H- 19 A]
ll
In the instant case the absence of any express reference to a specific area
constituted a ground in the High Court for alleging that the Central Government
did not apply its mind to the "area" ingredient when deciding on the notification.
The large volume of material produced by the respondents shows that the Central
Government did apply its mind to the fact that the notification should cover the
entire country. [19 C·D)
F
CRIMINAL APPELLATE JURISDICTION Criminal Appeal
• No. 552 of 1976.

From the judgment and order dated the 22nd May, J 975 of
the Allahabad High Court in Criminal Misc. Application No. 2138 G
of 1971.

Pramod Swarup for the Appellants.

R.K. Bhat, for Respondent No. I. H
P.A. Francis and R.N. Podar for Respondent No. 2.
16 SUPREME COURT REPORTS [I 982] I S.C.R.
•
A The Judgment of the Court was delivered by

PATHAK, J. This appeal by certificate granted under sub-
clause (c) of clause (I) of Article 134 of the Constitution by the
Allahabad High Court is directed against a judgment of that Court
dismissing the appellants' petition for quashing criminal proceedings
B against them under the Forward Contracts (Regulation) Act, 1952.

The appellants are being prosecuted for various offenoes under
...
s. 20 and s. 21 of the Forward Contracts (Regulation) Act, 1952 on
the ground that three transactions of purchase of Tur (Arhar) were
entered into by them in violation of Notifications Nos. 1384-B,
c 1384-C and 1384-D, all dated July 17, 1958 issued by the Central
Government under that Act. During the proceedings before the
Sub-Divisional Magistrate, the appellants challenged the validity of
the three notifications. The Sub-Divisional Magistrate, and there-
after the learned Sessions Judge in revision took the view that it
was premature to decide the question. They applied to the Allaha·
D bad High Court under s. 56JA read with s. 435, Code of Criminal
Procedure, raising the same question and praying for the quashing
of the criminal proceedings. The learned Single Judge of the High
Court hearing the petition considered the question to be of substan-
tial importance and accordingly the case was referred to a larger
Bench.
E •
A Division Bench of the High Court by its judgment dated
May 22, 1975 upheld the validity of the notifications and dismissed
the petition. It saw no substance in the plea of the appellants that
the notifications did not specifically mention the area over which
they were to operate and, therefore, were invalid. On application
F by the appellants the High Court granted a certificate under sub-
clause (c) of clause (1) of Article I 34 of the Constitution that the
case was fit for appeal to this Court.
•

The point on which the certificate has been granted is whether
G the only method of specifying the area in a notification issued under
sub·s. (3) of s. 18 of the Forward Contracts (Regulation) Act, I 952
is to expressly describe it in the notification itself or whether such a
specification can be inferred from other circumstances as well as
notifications issued simultaneonsly. That is the only point on which
H this appeal is pressed, and we need consider no other aspect of the
case.
FIRM RAMDEO v. U.P. STATE (Pathak, J.) 17

It is desirable to appreciate first the statutory matrix within A
which the controversy is embedded. Sub-s. (I) of s. 18 declares
that the provisions of Chapters III and IV (Chapter IV includes
s. 17) shall not apply to non-transferable specific delivery contracts
for the sale or purchase of any goods. But by virtue of sub-s. (3)
of s. 18 if the Central Government is of opinion that in the interest
of the trade or in the public interest, it is expedient to regulate and B
control such contracts in any area, it may by notification in the
Official Gazette, declare that all or any of the provisions of Chapters
III and IV shall apply to such classes of non··transferable specific
delivery contracts in such area and in respect of such goods or class
of goods as may be specified in the notification and may also specify

- the manner in which and the extent to which all or any of the said
provisions shall so apply.
c

In other words, by a notification under sub-s. (3) of s. 18 the
Central Government may make the provisions of s. 17 applicable to
a class or classes of non-transferable specific delivery contracts in
an area and in respect of specified goods or class of goods. By
D
itself, s. 17 deals with forward contracts for the sale or purchase of
any goods or class of goods. On a notification under sub-clause
(3) of s. 18 it is made applicable to non-transferable specific delivery
contracts. On making s. 17 thus applicable, a notification can
follow in exercise of the powers under sub-s. (1) of s. 17, prohibi-
E
• ting such contracts save with the permission of the Central Govern-
ment; and the issue of such a notification, by reason of sub-s. (3)
of s. 17, brings into play the provisions of s. 16.

Now on July 17, 1958, the Central Government in the Ministry

- of Commerce and Industry issued three notifications under the
Forward Contracts (Regulation) Act, 1952. The first notification,
S.O. 1384-B was issued under s. 17 read with s. 16 of the Act, and
F

prohibited forward contracts for the sale or purchase of certain
specified goods, including Tur (Arhar). The second notification,
S.O. 1384-C was issued under sub-s. (3) of s. 18 and declared that
s. 17 would apply to non-transferable specific delivery contracts in G
respect of the goods specified in the notification, and these included
Tur (Arhar). In consequence, the third notification, S.0. 1384-D,
was issued under sub-s. (1) of s. 17, declaring that no person could,
save with the permission of the Central Government, enter into any
non-transferable specific delivery contracts for the sale or purchase of H
the goods specified therein, and predictably these included Tur
(Arhar).
18 SUPREME COURT REPORTS [1982] I S.C.R.

A As a result of the three notifications, there was an integrated
scheme, prohibiting forward contracts as well as non-transferable
specific delivery contracts for the sale or purchase of Tur (Arhar).

The contention of the appellants is that the powers conferred
B by sub-s. (3) of s. 18 to apply the provisions of Chapters III and
IV to non-transferable specific delivery contracts must necessarily
be exercised in terms of a specific area, and the area must be speci
fied in the notification. They urge that is what sub-s. (3) of s. 18
mandates. And they say as the Notification S.0. 1384-C does not
expressly specify any area, it is not in accordance with sub-s. (3) of
c s. 18 and is incomplete and therefore invalid. In consequence, they
submit, the Notification S.O. I 384-D must also fail.

It seems to us that what sub-s. (3) of s. 18 requires is that
before issuing a notification under that provision the Central Govern
ment must satisfy itself that the regulation and control of non·
n transferable specific delivery contracts in a particular area are in the •

interest of the trade or in the public interest. The determination of
the area over which the regulation and control will extend is a vital
component to which the Central Government must apply its mind
when deciding to issue a notification. And when a notification is
in fact issued the area must be communicated by specifying it in the
E notification. The area specified may be comprehended from material
expressed or implied in the notification. The sub-section does
not require that the area must be expressly specified in the notifica
tion. If it is possible to define the area by necessary implication,
that is sufficient compliance With the requirement of the sub-section.
In the present context, when the notification does not expressly
F specify the area, one of two conclusions is possible. Either the
notification is intended to operate throughout the territory over
which the Act extends, or the omission indicates that the authority
required to apply its mind to the "area" ingredient did not do so.
Teese are two distinct, separate and alternative possibilities.

G A notification may operate over part only of the territory to
which the Act extends, or it may be intended to operate throughout
that territory. Ordinarily, whether the notification extends over
part only of the territory or throughout the territory would be speci
fied in the notification. If the notification is intended to operate
H over part only of the territory to which the Act extends, the noti-
FIRM RA!llDEO v. U.P. STATE (Pathak, J.) 19

fication must unnecessarily define that limited area. When it con- A
tains no express signification of the area, it may be implied that it is
intended to operate throughout the territory covered by the Act.
That is a construction by implication. It is not mandatory in such
a case that the notification should specify that it operates throughout
the territory to which the Act extends. ·
B
The alternative possibility is that the authority required to
determine the "area" ingredient did not do so when issuing the
notification. If such a contention is raised, and we point out that

- it was not raised before us, it is open to the authority to show that
it did in fact apply its mind to the matter. In the present case, the
absence of any express reference to a specific area constituted a
c
ground in the High Court for alleging that the Central Government
did not apply its mind to the "area", ingredient when deciding on
the notification. But a large volume of material was produced by
' the respondents before the High Court to show that the Central
Government did apply its mind to that fact and it was intended D
that the notification should cover the entire country.

In the result, the appeal fails and is dismissed .

• N.V.K. Appeal dismissed. E

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